Shouldn't nominal interest rates be illegal?
First of all, I'm really new to anything related to financial math and the like, but I just can't get my head around these nominal interest rates. The way I'm getting it is that it's just a euphemism for "fake interest rate." I mean, shouldn't every financial operation that involves interest rates be obligated by law to explicitly state the effective rate? Isn't it essentially just a mechanism to deliberately make the rates seem lower than they are? Or are there any other uses?
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Isn't it essentially just a mecanism to deliberately make the rates seem lower than they are?
Yes. In most modern western countries, it is illegal to only disclose the nominal rates, and effective rates must be disclosed. Apparently, according to the comments, it is also so in Russia. Even in the US, where consumer rights are similar to undeveloped third world countries, this specific issue is covered by law (the Wikipedia article describes quite well though how lenders in the US work around that in some cases).
If it is not so in your country - you'll have to take it up with your representatives in the legislature.
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